L.A. Gives Contract to Company Suspected of Arts Plaza Fraud : Government: The city waives anti-apartheid rule in construction deal. Firm is being investigated for possibly double-billing Thousand Oaks.

A construction-management firm suspected of double-billing the city of Thousand Oaks won a contract Wednesday to renovate Los Angeles City Hall despite business ties to South Africa that violate the city’s anti-apartheid policy.

In an 11-2 vote, the Los Angeles City Council waived its policy and selected Lehrer McGovern Bovis Inc. for a $3-million contract managing the seismic and historical upgrade of the 65-year-old City Hall.

The debate prompted even staunch advocates of the city’s tough anti-apartheid policy to question its usefulness as democratic reforms are negotiated in South Africa.

Lehrer McGovern Bovis--which oversaw renovations at the Statue of Liberty and was recently selected to manage upgrades at the Washington Monument--ranked first among the 12 bidders for the City Hall project.

But its top status became jeopardized when city officials learned that a parent company, Peninsular and Oriental Steam Navigation Co., has a subsidiary doing business in South Africa. Company officials did not report the connection until after competitors complained.

“It’s so remote that I didn’t even know there was a connection,” said Joseph J. Scarano, president of the company’s Los Angeles office.

The city forbids contracts with companies that have ties to South Africa. But an exemption can be granted if the council deems it in the best interest of the city or if the company in question offers substantially higher quality than its competitors. There have been numerous exemptions since the policy was adopted in the mid-1980s.

When the city Board of Public Works learned of the South African connection, it voted to select the second-ranked company, Turner Construction Co. But the board reversed itself and recommended that the council grant the exemption for Lehrer McGovern Bovis.

The council’s vote comes as the FBI is investigating Lehrer McGovern Bovis for alleged fraud involving the company’s work on the $64-million Civic Arts Plaza in Thousand Oaks. Investigators searched the company’s Los Angeles and Thousand Oaks offices two weeks ago as part of a probe into suspected double-billing for work on at least four projects in California, including an $83-million federal courthouse renovation in San Francisco and a $187-million expansion at UCLA.

When Los Angeles city officials learned of the fraud investigation late last month, they vowed to take a second look at the company. But Lehrer McGovern Bovis remained the top pick.

In anticipation of Wednesday’s vote, the company mounted an aggressive offensive--hiring Johnnie Cochran, a prominent African-American attorney, and the politically connected lobbying firm of Rose & Kindel--to represent them.

At Wednesday’s meeting, Cochran displayed a letter in which a top official with the African National Congress argued that the council ought to grant the exemption.

“At this stage, new disinvestments would not be in the interest of a future democratic South Africa,” said Thabo Mbeki, the group’s secretary for international affairs.

Turner Construction, which also retained a high-priced lobbyist, sought to have Lehrer McGovern Bovis eliminated from consideration because of its South African ties. Randall H. Stoke of Latham & Watkins argued that Turner, which has a substantial Southern California work force, is just as qualified. Turner has completed work on Oakland’s City Hall, a building that resembles Los Angeles’ civic headquarters, company officials said.

Councilman Mike Hernandez favored sending the matter back to committee. “I don’t believe we should ignore the principles we believe in because people happen to hire the right lobbyists,” Hernandez said.

But Councilman Mark Ridley-Thomas, a staunch advocate of the anti-apartheid policy, argued that it ought to be waived in this case. He said the company’s connection with South Africa was remote and urged city officials to take a second look at the policy.

In a final vote, Councilmen Nate Holden and Hal Bernson were the only members to oppose the waiver.